A Stock That Can Prove to Be a 'Wheel of Fortune' for Investors
Rishabh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
From the Wheel of fortune progressive slot in 1996 to House M.D. Slots on Facebook in 2013, International Game Technology (NYSE: IGT) has come a long way in the gaming era, not only for the gamers but also for the investors. And yes, there is more in store for both kind of players.
International Game Technology is a well known global gaming company which specializes in designing, developing and marketing of electronic gaming equipment and systems products. It markets a wide range of gaming product lines worldwide including the most popular slot machine games.
IGT in news!
IGT beats first quarter estimates – The company reported its first quarter results on Tuesday, Jan. 22, 2013. Revenue for the quarter increased by 19%. The company reaffirmed the adjusted earnings from continuing operations between $1.20 and $1.30 per share. Analysts had forecast earnings of $1.24 per share. The CEO of the company believes it is a great start to the fiscal year and demonstrates that the company is moving in the right direction.
IGT launches a new game on Facebook – IGT recently launched a free-to-play version of the new slot game House M.D. Slots on the largest social networking site, Facebook. The game can be played for free. The company is expected to generate revenue from advertisements and through the sale of in-game virtual goods in exchange for virtual currency. IGT bought Double Down interactive for $500 million in 2012. DoubleDown Casino is the most popular casino-style social gaming application on Facebook, with more than 5 million monthly active users.
The addition of the new game is expected to incrementally benefit the user base. Moreover, IGT’s interactive gaming segment had recorded robust revenue growth in the last reported quarter.The company sees it as a long term strategy aiming to achieve new heights in the company's earnings.
A quick look back
In the last quarter, IGT tallied revenue of $631.1 million, 17% higher than the previous year quarter's $539.8 million. Adjusted earnings per share from continuing operations increased 58% to $0.38.
Wall Street was quite optimistic about IGT's first quarter results. An earnings per share was projected for $1.24 (non GAAP EPS: $0.38 and GAAP EPS : $0.32). Revenue for the quarter was estimated to be $526.4 million, which would be 8.2% higher than the year earlier total of $445.5.
What they got?
The actual results were better than expected, making the investors happy. The EPS was indeed announced to be $1.24 (GAAP EPS : $0.24, which was 41% increase). It earned $0.28 per share on an adjusted basis from continuing operations, versus $0.17 per share last year. Revenue for the quarter was $530 million, which was an increase by 19%. Net income increased 32.45% to $65.3 million ($0.24 per diluted share) in the quarter versus a net gain of $49.3 million in the year-earlier quarter. In sales, North America product revenue increased by 54%, selling 5100 replacement units.
WMS Industries (NYSE: WMS) being a tough competitor to IGT also designs and sells gaming devices for casinos. Lately it entered into an online content licensing agreement with the British Columbia Lottery Corporation. The company posted its fourth quarter profit way below analysts' expectations, following which its shares lost about a fifth of its value. But the company still expects revenues to be up by 4% in this new fiscal year. It is positive and is relying on gaming expansion that will help them in moving forward.
Bally Technologies (NYSE: BYI) was selected by Atlantic Lottery Corporation as an important supplier of VLTs. It has recently got into an agreement with Saskatchewan for supplying video lottery terminals. Showing impressive statistics, the company also reported better than expected quarterly results. It also announced, that it will exhibit a large selection of innovative gaming solutions at the International Casino Exhibition (ICE) in London, England in February. This will not only help it in increasing the casino operator's revenue, but also be a boost to its own turnover. Bally expects per-share earnings of $2.95 to $3.30 for the new fiscal year. The company will present its second quarter fiscal 2013 results after the market closes on Thursday, Jan. 31.
What can investors get?
The numbers say that IGT's revenue has grown for three quarters in a row. In the fourth quarter of the last fiscal year revenue rose to $631.1 million, nearly 16.9% rise. Its current dividend yield is 1.8%. The company has an annualized dividend of $0.28 per share. If you are holding the shares at present, better hold onto it, as IGT's impressive performance history and strong market position in the gaming industry can definitely prove to be a 'Wheel of Fortune' in the long run.
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